CED

June 2015

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>> COVER STORY INDUSTRY RESEARCH Preface On May 11, 2004, the Environmental Protection Agency signed the final rule introducing Tier 4 emission standards, to be phased-in over the period of 2008- 2015. While much has been published regarding the required reduction in emissions and improved fuel efficiency, there has been relatively little coverage on the overall adoption, acquisition and practical ownership of Tier 4 technology. To understand the expectations and reality regarding the regulation's impact on the industry, EquipmentWatch and AEMP partnered to survey the heavy equipment community and present the current state of Tier 4. Owning Tier 4 Overview: e vast majority of survey respon- dents own or manage heavy equip- ment (86 percent). Fleet sizes vary significantly by respondent category. Rental companies report owning/ managing the largest fleets (with an average of 970 total pieces of equip- ment) followed by sellers (average 755). Contractors and DOTs report relatively smaller fleets, with an aver- age 464 and 444 pieces of equipment owned/managed respectively. Currently, market penetration of Tier 4 equipment is relatively low. In fact, one in four contractors (24 percent) report having no Tier 4 equipment at all. Just over a third report Tier 4 equipment comprises less than 20 percent of their fleets. For the contractors who do currently have Tier 4 equipment, 73 percent is Tier 4 I, followed by 19 percent Tier 4 F, and 8 percent Tier 3 flex. Half of all contractors surveyed plan to invest in Tier 4 compliant equipment within the next 18 months. ose planning to do so are most likely to invest in Tier 4 Interim (61 percent) and/or Tier 4 Flex equipment (55 percent). Life Expectancy: Respondents expect their Tier 4 equipment to yield 23 percent more hours on average than their Tier 3 equipment. Tier 4 and the True Cost of Ownership 'The 2015 Tier 4 Benchmark Report' Uncovers Industry Facts, Moods and Expectations Equipment Watch and the Association of Equipment Management Professionals (AEMP) present the heavy equipment industry's most comprehensive report – the editor extends thanks to both organizations for permission to reprint their valuable findings in CED. 36 | www.cedmag.com | Construction Equipment Distribution | June 2015 1 in 4 HAVE NO TIER 4 EQUIPMENT While just over a third... 35% report Tier 4 comprises less than 20% of their fleet. CONTRACTORS ON AVERAGE, HOW LONG DO YOU EXPECT YOUR EQUIPMENT TO LAST IN TOTAL? TIER4 TIER3 11,513 HR 9,333 (IN HOURS) AT A GLANCE • The finance world is seeing very little Tier 4 equipment, but has seen an increase in finance or leasing costs. • The insurance world is also seeing very little Tier 4 equipment, but an increased insurance cost. • The majority of rental companies are renting Tier 4, but it will come at an increased cost for customers. • Equipment owners/managers can expect to see increases in purchase prices, maintenance costs, and training costs, but can expect fuel cost savings. Not only are the purchase prices of Tier 4 equipment higher, but most owners have experienced higher than expected TCO of their Tier 4 equipment. Incidence of Tier 4 equipment within company fleets remains quite low, and is poised to remain so through mid-2016.

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